Owning Your First Car: Is the Luxury Really Worth Your Savings?
Own a car? Saving up for one?
A dream car is one of those popular life dreams, like a dream home, or a dream job. The car is the most popular transport option for journeys under 400km, and over 70% of all passenger movements within Australia occur on roads. Cars have become such a fundamental part of our lives, even aliens that come to visit Earth mistake cars for the planet’s dominant species.
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The overwhelming presence of cars in our society is a growing cause for concern. Automobile exhaust is responsible for one eighth of greenhouse gas emissions, and five pacific islands just sunk as a direct consequence of excess greenhouse gases. If you drive a car or aspire to, not only will you be causing externalities, but the added benefit of owning a car may not be as beneficial as you thought.
A car you freedom to travel wherever you want… or does it?
I was at a seminar yesterday with a few friends. They all drove to the event whereas I walked. Those who drove had to leave at a certain time whether they liked it or not because otherwise their parking ticket would expire, whereas I was not constrained by any such factor.
Driving costs don’t stop at just the petrol and parking. In Queensland, licencing, registration and CTP insurance are overhead costs totalling $700–900 annually depending on the vehicle. But the average person only drives their car on the road for 4% of its life, chances are 96% of that money is paying for your car to sit parked doing nothing but depreciating.
A car owner once told me “cars are a bottomless money pit.” He was referring to the fact that he relies on a car to get to work and he had to choose between paying for repairs that would cost almost as much as what he bought the car for, or buying a newer more reliable car. The point is, he did not fully consider all possible costs that arise as a result of his ownership of that car. Many car buyers do not and end up paying through the nose for it.
The Costs of Automobile Dependence
Automobile addiction is the concept that once you buy a car, and start using a car, it is harder and sometimes costly to stop. This is because a person’s lifestyle patterns start to depend on the use of a car, such as time-budgeting and employment (many job descriptions require your own car), and a car owner becomes more price-inelastic to increased insurance, fuel and service fees. Personal funds are paid and sacrifices are made in order to maintain the person’s car ownership. The concept extends to the implication of infrastructure and businesses are being tailored to automobile use.
Car parks are a significant opportunity cost of space caused by automobile addiction. Developments such as high rise apartments and shopping malls are often accompanied by huge car parks to accommodate their car-driving clientele. Even fast food is tailored towards cars; after 11pm many fast food outlets in Australia refuse to serve customers without a car.
Expenditure to accommodate more individual cars instead of on more efficient mass transit systems affects the national economy as a whole. Although drivers are not directly paying for it, their aggregate demand for more road infrastructure leads governments to prioritise it higher in the budget, increasing the opportunity cost of not being able to fund other projects.
Furthermore, congestion is an externality of driving. A very expensive externality for that matter, estimated at $15 billion per year to Australia’s national economy. Congestion-reducing projects such as bypasses often force residents out of their much-loved homes.
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But we don’t necessarily “gotta build bypasses.” Increased car ownership in an economy decreases the value of cars and makes alternative transport infrastructure like railways more attractive, as trains are not affected by traffic congestion.
If I buy a car, am I doomed to succumb to automobile dependence?
Private and public transport can co-exist harmoniously. Most public transport users in Melbourne also own a car. They choose public transport because it is less stressful, faster and more convenient, and only drive to and from train or bus stations and other less frequent trips. This effect is observed in many other high-density cities across the world where CBDs riddled with high parking fees and traffic congestion whereas public transport to the CBD is frequent, can bypass traffic and is cheaper.
Cars do serve an important purpose for many people. In NSW, work-related business was found to be the most common reason for driving. Driving for work-related business includes real estate agents driving to properties, tradesmen driving to their customers, or emergency services. These work tasks could not be accomplished effectively without private transport. Interestingly, less participants drove just to commute to work and more used public transport instead for that purpose, again showing evidence of decreasing automobile dependence.
If you own a car less than 9 years old and are over 21, you may be able to make money and reduce automobile dependence at the same time. Serving passengers was second by 1% to being the most popular reason for driving a car in NSW. This includes taxi and shuttle services and most recently the controversial ride-sharing gazelle, Uber. Uber provides a cheap, accessible service for people who cannot afford cars or only need car transport incidentally, but it only exists because people own cars.
Should I continue driving or saving up for a car?
Personally, I have a licence and the money to buy a car, but I choose not to drive. I live next to a train station a short distance from the city. Parking at work or uni is costly and may not even save any time compared to catching the train given the time it takes to wait in traffic and find a parking spot, and the fact I can use green bridges as a shortcut. I am not the only one in this situation, yet another sign of reduced automobile dependence in capital cities.
Car ownership in excess creates national economic problems like environmental damage and traffic congestion, but owning a car yourself is not necessarily bad, especially since cars can be used to efficiently provide goods and services for the economy. At the same time, a car is not necessary for a successful life and does not necessarily give a person freedom. The reality is car ownership is beneficial for some people with a certain lifestyle, but it is not for everyone.
Originally published at The Isthmus.
